CS1 - The Algebraic Formula
1. The CSA works out the maintenance requirement. This is the amount of maintenance they want to collect. This amounts to the total amount of income support you could receive were you to be in receipt of benefits. Even if you are not in receipt of benefits this element of the calculation is always carried out. The maintenance requirement is the cornerstone of the CSA calculation.
2. Calculating your assessable income. This is done by taking your gross income, deducting Tax, NI and half pension.
3. Determining the net income of your ex. This is carried out by taking their gross income and deducting Tax, NI and half pension.
4. Calculate your exempt income. This consists of approximately £50 per week for you to live on, set income support allowances for the children and rent or mortgage payments on the home you live in.
5. Determine your ex’s exempt income. This is calculated by adding together your ex’s mortgage or rent on the property he lives in, £50 per week for him to live on and income support allowance figures for any children that live with him.
6. Determine your assessable income. This is done by deducting the exempt income from the net income.
7. Determine your ex’s assessable income. This is done by deducting the exempt income from the net income.
8. Comparing the percentage income you and your ex have between you and calculate a reduction of the maintenance requirement. In reality in most cases the parent with care is in receipt of benefits or Child Tax or Working Tax Credit and therefore they have no income for CSA purposes. Hence therefore this part of the calculation is skipped.
9. Your ex is then deducted at 50p in the £ against his assessable income until he reaches a maintenance requirement figure (or the adjusted maintenance requirement figure if you have assessable income yourself). Once the maintenance requirement figure is reached the deduction then reduces to 15p in the £ for one child, 20p in the £ for two, 25p in the £ for three until the remainder of the non-resident parent’s income is utilised or the maximum assessment is reached. The maximum assessment varies on a case by case basis dependant upon the number of children for whom is payable and their ages.
10. Work out your ex’s protected income. This is a combination of income support allowances he would receive were he in receipt of benefits together with his mortgage interest or rent (note only mortgage interest is used in this part of the calculation – all mortgage payments are used in determining exempt income). A further £30 is then added to the figure and a further tolerance adjustment is applied. If this figure is higher than the maintenance determined above then the protected income figure is ignored. If this figure is lower than the figure determined above then this becomes the assessment subject to the final check.
If the maintenance calculated is over 30% of your ex’s net income, then it is reduced to 30%.